Cryptocurrency exchange Coinbase has terminated partnership with the troubled crypto bank Silvergate following its failure to publish a 10-K report as required by the U.S. Securities and Exchange Commission (SEC).
Coinbase disclosed on March 2 that it would no longer accept or initiate payments with Silvergate, stressing that institutional client cash transactions will now be facilitated with other banking partners.
The crypto exchange further reiterated that all client funds continue to be safe as it is held at FDIC-insured U.S. banks.
However, Coinbase explained that its decision was not unconnected to the recent development on financial insolvency of Silvergate. The exchange says:
“In light of recent developments & out of an abundance of caution, Coinbase is no longer accepting or initiating payments to or from Silvergate.“
While Silvergate is in financial crisis and currently struggling to weather the storm, its stock fell by 31% on March 1 following the postponement of the annual report on the financial health of the company for another two weeks.
Silvergate at the Brink of Collapse
Like the collapsed FTX exchange, crypto bank Silvergate is probably the next to go down the drain following its current financial turmoil.
It is noteworthy that the fintech company financial crisis was influenced by the FTX collapse due to the close partnership between the duo.
Already, Silvergate Bank and its CEO Alan Lane have been alleged of aiding and abetting a multibillion-dollar fraudulent scheme in partnership with the former FTX founder Sam Bankman-Fried.
In light of the recent developments, Silvergate stock has emerged as one of the most shorted stocks in the market as its stock price continues to dive. There is no mincing word that the eventual collapse of Silvergate will affect the crypto market.
At the time of writing, the entire crypto market cap is down by 3.75% with Bitcoin trading at $22,375 according to data from CoinMarketCap.
